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February 22, 2010

EPA Proposes Amendments to TSCA Section 4 Enforceable Consent Agreement Procedures

The ACTA Group

On February 19, 2010, the U.S. Environmental Protection Agency (EPA) proposed important revisions to the procedures for development of enforceable consent agreements (ECA) to generate test data under Section 4 of the Toxic Substances Control Act (TSCA). 75 Fed. Reg. 7428 (Feb. 19, 2010). The proposed rule includes some sweeping changes for when and how negotiations will be initiated, conducted, and concluded, and limits the timeframe within which these activities will take place. Companies that manufacture or process chemical substances and mixtures that have been, or potentially could be, subject to TSCA ECA negotiations, as well as other stakeholders that have participated in such negotiations in the past, should consider commenting on the proposal to ensure that ECA negotiation procedures remain a viable option to the development of Section 4 test rules. The effect of the changes as proposed could well be to limit significantly the ability of industry and interested others to negotiate testing agreements, for the reasons discussed below. Comments must be received on or before March 22, 2010.

TSCA Section 4 authorizes EPA to require manufacturers, importers, and processors of existing chemical substances to conduct health effects, environmental effects, environmental fate, and/or other types of needed testing “to develop data with respect to the health and environmental effects” of the chemical if EPA makes certain findings under Section 4(a). As an alternative to rulemaking, EPA can obtain and often has obtained test data through its ECA process. EPA states that ECAs “are designed to provide EPA with data identified as necessary to evaluate a particular chemical substance without the need for EPA to first make the risk- or exposure-based findings for, or promulgate, a TSCA section 4 test rule, and without introducing delays inherent in the rulemaking process.” EPA can select one or more chemical substances or mixtures for testing based on the recommendations or “recommendations with intent to designate” of the Interagency Testing Committee (ITC) or EPA’s own initiative. EPA’s procedures for developing test rules and consent agreements are set forth at 40 C.F.R. Part 790. EPA states that it is proposing to amend these procedures to make ECAs “quicker and easier to implement, to preserve existing provisions for transparency and adequate opportunities for public participation, and to make them easier for the public to understand.”

EPA notes in the Federal Register notice that the ECA process has been used with “declining frequency” over the past several years and the reduced number of ECAs has not been offset by a corresponding increase in Section 4 test rules. EPA originally anticipated that an ECA would be completed in 50 weeks. The average time to complete an ECA is approximately two years, and negotiations for “ECAs on many chemicals have been started but never formally concluded, or have been terminated.” According to EPA, the proposed changes are intended to “increase the efficiency and flexibility of the ECA process.”

Some of the key proposed amendments include:

  • Clarifying That There Is Only One Procedure to Develop ECAs: EPA is proposing to reorganize the existing regulations to clarify that there is one ECA negotiation procedure applicable to all circumstances when an ECA would be appropriate, whether the ITC has made a recommendation or designation, or EPA is acting on its own initiative. EPA states that the reorganization “will help centralize all of the ITC-related procedures and remove the potentially confusing ITC discussion from the ECA procedural rules.”
  • Requiring Manufacturers and/or Processors to Submit a Proposed Consent Agreement to EPA: Under the current procedures, the starting point for ECA negotiations is the date EPA receives the ITC report recommending a chemical for testing. Opportunities to hold public meetings are provided, and issuance of data-gathering rules under TSCA Sections 8(a) and 8(d) precede ECA negotiations between EPA and interested parties. Under current procedures, the starting point for negotiations on EPA initiated chemicals is a Federal Register notice describing the tentative evaluation of testing needs and otherwise initiating the process. EPA is proposing “to revise the ECA procedures to reflect that negotiation of an ECA for a chemical will not commence until EPA has received and evaluated a testing agreement proposal, and until EPA believes it is likely that proceeding with negotiation of a consent agreement, based on the proposal, would be an efficient and successful means of developing the test data.” EPA states that “not requiring that a minimally acceptable proposed testing agreement be submitted to, and evaluated by, EPA before commencing negotiations has contributed to substantial delay in ECA completion.” By changing when and how negotiations are initiated, EPA’s proposal is a significant difference from current procedures and puts a potentially large burden on manufacturers and processors to develop test proposals without the benefit of EPA’s input. Additionally, under the proposal, EPA reserves unilateral authority to determine whether it is in the Agency’s interest to enter into negotiations rather than issuing a Section 4 test rule. While EPA does so now under existing rules, the authority is more explicit under the proposal. Finally, the change raises some interesting potential antitrust issues as the Noerr-Pennington doctrine, which immunizes entities from antitrust liability, may arguably be more difficult to assert when the testing proposal originates from “industry,” however that is defined, as opposed to in response to a government action.
  • Limiting the Required Number of Meetings and Notices Associated with ECA Negotiations: The current regulations provided for a public focus meeting to be scheduled approximately six weeks after EPA receives an ITC report, with another public “course-setting” meeting to discuss EPA’s preliminary testing determinations scheduled approximately 22 weeks after EPA receives an ITC report. While EPA proposes to maintain these meetings when an ITC report contains a recommendation with an intent to designate a chemical for testing, for other circumstances (i.e., when ITC has recommended but not stated an intent to designate a chemical for testing or when EPA acts on its own initiative) EPA proposes to amend the procedures so the only meetings required by the ECA procedures would be the “negotiation meetings.” Negotiation meeting(s) would be set by EPA after EPA has evaluated a proposed testing agreement and believes that proceeding with ECA negotiations would be an efficient means of developing the data. The purpose of such meetings would be to negotiate a consent agreement. EPA states: “Other notices regarding EPA’s views on testing needs, solicitation of interested parties to participate in negotiations, and invitations to submit draft testing agreement proposals can be efficiently accomplished through Federal Register documents, through the EPA website, and through other forms of public communication.”
  • Including Firm Deadline by Which ECA Negotiations Must Conclude: The current regulations set forth, in Appendix A, a timeframe for negotiating ECAs. As noted above, when EPA originally promulgated the ECA procedures in 1986, it anticipated that the timeline for completing an ECA would be 50 weeks. These timeframes are not binding on EPA and EPA has exercised tremendous discretion and flexibility with this schedule. In the proposed amendments, EPA would include a new regulatory provision that states: “The period between the first negotiation meeting and final agreement, if any (“the negotiation period”), will be no longer than six months, unless extended prior to its expiration.” An extension of up to 60 days can be granted by EPA if, in EPA’s sole discretion, “it seems likely to EPA that a final agreement will be reached during that time.” This much compressed timeframe places significant pressure on all parties to achieve consensus, and gives EPA significant negotiating clout with the six-month “hard stop” as a back stop to lagging or difficult negotiations on potentially complex issues.
  • Expressly Allowing EPA to Terminate Negotiations If EPA Believes Negotiations Are Unlikely to Produce a Final Agreement: Under the current regulations, EPA states that it is only provided an opportunity to terminate ECA negotiations for chemicals that the ITC has recommended for testing with an intent to designate, and can occur “only ten weeks after the earliest time negotiations begin, before the comment period for the interested parties, and before the ‘comment resolution meeting.'” In the proposed rule, EPA proposes to “allow EPA to affirmatively terminate negotiations at any time it believes negotiations are unlikely to produce a final agreement, regardless of whether the chemical substance or mixture subject to the negotiation was selected for testing consideration based on an ITC recommendation-with-intent-to-designate, an ITC recommendation, or EPA’s own initiative” (emphasis added). While it is assumed that EPA would use this authority judiciously, given the proposed compression in the negotiation timeframe, the unilateral nature of this proposed change is likely to affect greatly other stakeholders’ negotiating power.
  • Consolidating and/or Clarifying a Host of Other ECA Process Provisions. The proposal also includes a host of other more procedural and clarifying amendments that are intended to ensure the ECA procedural rules are clear and efficient. For example, the current rules sometimes confuse ITC discussions and ECA rules in the same provisions. The proposal seeks to separate more clearly the ECA negotiation procedure from other aspects of the ITC provisions.

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We hope this information is helpful. As always, please call if you have any questions.